Compass Archives - Green Market Report

Dave HodesJuly 25, 2022
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15min380

While the psychedelics industry gets its proverbial ducks in a row, there is a growing interest in sharing business opportunities to help companies jostle for market leadership in an ever-burgeoning marketplace. 

In the developing merger and acquisitions scenario, psychedelics company leaders are hoping that mergers will help accelerate mainstream adoption and innovation, eventually leading to faster approval of psychedelics that are accessible and affordable. But sometimes, market conditions are not ideal.

Does the psychedelics sector even need mergers and acquisitions? That was a question asked of “Shark Tank’s” Kevin O’Leary at the inaugural Benzinga Psychedelics Conference in April. “The minute one of them gets to Stage 3 [trials], you’re going to lift all the tides,” he said. “I think Big Pharma’s starting to look at it,” O’Leary said, then predicted Atai Life Science, Compass Pathways and MindMed will have to merge. “They each need another $200 million by the time they get this to medicine.”

Here are 7 of the more interesting mergers and acquisitions that the psychedelics movers and shakers are watching.

  1. Eleusis and Silver Spike Acquisition Corporation. In January, Eleusis, a clinical-stage life science company and Silver Spike Acquisition Corp. II (“SPKB”) (NASDAQ: SPKB/SPKBU/SPKBW), a publicly traded special purpose acquisition company, announced they signed a definitive business combination agreement expected to make Eleusis a public company. But the deal was terminated on June 9 due to “unfavorable market conditions.”

The combined enterprise value of the merged company was estimated at approximately $446 million. The transaction was expected to be completed in the second or third quarter of 2022, with the current owners of Eleusis retaining approximately 49 percent ownership of the combined company. 

It was expected that, upon the close of the transaction, the combined company would be operated through Eleusis Inc., a new holding company, and would apply to have its common stock listed on NASDAQ under the symbol “ELEU.” After the termination, Silver Spike II intends to continue its efforts to identify new prospective target businesses focused on the cannabis and alternative health and wellness industries.

  1. Mycotopia Therapies and Emotional Intelligence Ventures (Ei.Ventures). Mycotopia Therapies Inc. (OTC Pink: TPIA), a biopharma company focused on research, technology, and the development of medical psychedelics, announced in May an update on the previously announced merger with Ei.Ventures Inc. (“Ei”). Mycotopia is a subsidiary of Ehave, which owns approximately 9,793,754 shares of Mycotopia Therapies valued at more than $24 million. The transaction between Mycotopia Therapies and Ei.Ventures will be structured as a triangular merger. The two companies will form a new holding company, PSLY.COM, and operate as subsidiaries after the merger. PSLY.COM will apply for a NASDAQ listing. The companies anticipate closing the transaction on or about July 30, 2022.
  2. Numinus and Novamind. Numinus (TSX: NUMI) (OTCQX: NUMIF) announced in April that they are acquiring Novamind Inc. (CSE: NM) (OTCQB: NVMDF).

The acquisition will be done in stock, and shareholders of Novamind will receive 0.84 of a common share of Numinus (called an exchange ratio) per Novamind share held, implying an offer price of $0.44 per Novamind share. When the transaction is completed, Novamind shareholders will own around 18 percent of Numinus.

The combined company will operate 13 wellness clinics in focused geographies across the U.S. and Canada and will continue developing and scaling innovative psychedelic therapy protocols and procedures for screening, preparation, dosing, and integration targeting difficult-to-treat mental health conditions, including post-traumatic stress disorder (PTSD), pandemic burnout, depression, addiction, and eating disorders.

Novamind had completed a previous deal on November 12, 2020, when Hinterland Metals and Novamind, in a reverse takeover, entered into a consolidation agreement that was completed on December 22, 2020. This followed another move by Novamind on July 22, 2020, when the company completed the acquisition of 100 percent of the shares of Cedar Psychiatry and Cedar Clinical Research in Utah.

  1. Optimi Health, Numinus, and a genetic bank of mushrooms. In a different sort of business acquisition, Optimi Health (CSE: OPTI) (OTCQX: OPTHF) (FRA: 8BN), a company producing natural, scalable, and accessible mushroom formulations, acquired a diverse catalog of psilocybin and functional mushroom strains intended for cultivation in its 20,000 square foot, EU-GMP compliant facility in Princeton, British Columbia. The acquisition includes 24 psychedelic and nine functional strains, giving it one of the largest genetic banks in the sector. Formulated psychedelic strains will be made available to licensed researchers, Canada’s Special Access Program (SAP), as well as being utilized for on-site research in Optimi’s recently expanded analytical laboratory. The functional strains will be optimized for the company’s growing whole body, natural supplement brand, Optimi Life. 

Optimi Health also entered into an agreement with Numinus to provide certain psychedelic research, development, and testing services. Numinus holds a Health Canada dealer’s license and all activities proposed under the company’s arrangement with Numinus will be carried out by Numinus personnel at its facility in compliance with its dealer’s license requirements. All resulting intellectual property will be owned 100 percent by Optimi.

In July, Optimi Health submitted a request with Health Canada for an amendment to its Controlled Substances Dealer’s License. The amendment would enable Optimi to synthesize, process, and distribute pharmaceutical-grade MDMA, among other substances, at its Princeton facility.

  1. Atai Life Sciences and Compass Pathways. Although not truly a merger or acquisition (so far), Atai increased its ownership interest in Compass Pathways from 19.7 percent to 20.8 percent in November 2021. The increased equity stake position is seen by analysts as a demonstration of confidence in Compass Pathways following the announcement of data results of the Compass Pathways randomized, controlled, double-blind phase IIb clinical trial to study the effects of psilocybin on treatment-resistant depression. It was the largest psilocybin therapy clinical trial ever conducted, with 233 patients from 10 countries in North America and Europe. The objective of the trial was to find the appropriate dose for a larger, pivotal phase III clinical trial which Compass expects to begin in 2022.
  2. Awakn Life Sciences and Axon Klinikken AS. Awakn Life Sciences (NEO: AWKN) (OTCQB: AWKNF) (FSE: 954), a biotechnology company developing and delivering psychedelic therapeutics (medicines and therapies) to treat addiction, announced in October the closing of its acquisition of Axon Klinikken AS, a leading ketamine-assisted psychotherapy clinic in Norway. Axon will be renamed “Awakn Clinics Oslo AS.”

Awakn Clinics Oslo AS Clinic will serve as the hub from which Awakn plans to expand its clinical network across the region. The acquisition is part of Awakn’s larger strategy to open several addiction and mental health clinics across Europe, including clinics in Bristol and London, that Awakn anticipates being operational this year, according to the press release announcing the deal.

  1. Cybin and Entheon Biomedical Corporation. Cybin (NEO: CYBN) (NYSE American: CYBN) is a biotechnology company focused on advancing pharmaceutical therapies, delivery mechanisms, novel compounds, and protocols as potential therapies for various psychiatric and neurological conditions. On June 7, 2022, Cybin announced that, through its wholly-owned subsidiary, Cybin Ireland, it entered into an agreement to acquire a Phase I N. N dimethyltryptamine (DMT) study from Entheon Biomedical Corp. (CSE: ENBI) (OTCQB: ENTBF) (FSE: 1XU1) to accelerate the clinical development path for CYB004, Cybin’s proprietary DMT molecule for the potential treatment of anxiety disorders. The deal closed July 11, with Cybin paying a reported $780,000. Entheon will continue to support Cybin’s CYB004 study and act as external consultants for up to 12 months. Cybin will pay Entheon $373,000 for their consultancy services.

Dave HodesJuly 6, 2022
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13min170

Today in the psychedelics industry there is a flurry of activity by some of the industry’s biggest donors, business developers, celebrities, and other movers and shakers who are not only upping their involvement in the industry today but also laser-focused on where it is going. 

Many in the industry are calling 2023 a pivotal year based on the activities of the last two years—but even 2022 has become a bigger and better year for the industry than expected.
Here are five examples that prove the psychonaut juggernaut that the psychedelics industry has become:

  1. The most promising product developments are happening this year. Psilocybin therapy developer Compass Pathways (NASDAQ: CMPS) conducted phase IIb clinical trial of their COMP360 psilocybin therapy for treatment-resistant depression (TRD) in December, 2021. This randomized, controlled, multicenter, double-blind phase IIb trial was the largest psilocybin therapy clinical trial ever conducted, with 233 patients from 10 countries in North America and Europe. The company presented their findings at the American Psychiatric Association annual meeting in New Orleans, May, 2022. They plan to go into Phase III trials sometime this year, which is generally considered the last phase before FDA approval. Meanwhile, the results of an MDMA-assisted therapy for severe PTSD, which was a randomized, double-blind, placebo-controlled phase III study by the Multidisciplinary Association for Psychedelic Studies (MAPS), were published in May, 2021. MAPS hopes these results will facilitate FDA approval in 2023. Another psychedelics development company, Awakn Life Sciences, is getting ready to go to phase III with their ketamine for alcohol disorder clinical trial.

 

  1. Research and development donations are piling up. According to the Chronicle of Philanthropy, MAPS got a $5 million donation from Ashawna Hailey, a software entrepreneur. Pine, an anonymous Bitcoin millionaire, donated $1 million to MAPS and pledged another $4 million if that amount could be matched, which it was, by more than 500 new donors. Also supporting psychedelics research are major donors including David Bronner and his family, which owns Dr. Bronner’s, a company that makes organic personal-care products, who began donating $1 million a year in 2017 to MAPS and planned to continue through 2022; Bill Linton, the founder and CEO of life sciences company Promega, who started a nonprofit to secure government approval for psilocybin to alleviate depression; Mercer, the activist, whose concern focuses on veterans with PTSD; and the children of the late Richard Rockefeller, former chair of the Rockefeller Brothers Fund, who was a passionate advocate for the research. Additionally, a collaboration between Yale School of Medicine, Johns Hopkins University School of Medicine, and NYU Grossman School of Medicine to train psychiatrists in psychedelic medicine, announced in March, will be funded by a $1 million grant provided by another group of donors.

Others supporting psychedelics research include the foundation of Facebook co-founder Dustin Moskovitz and his wife, Cari Tuna; the foundation of Nick Pritzker, a venture capitalist and the former president of the Hyatt hotel chain, and his wife, Susan; George Sarlo, a Holocaust survivor and founder of an investment firm; SpaceX founder Elon Musk; and Groupon co-founder Andrew Mason.

 

  1. Psychedelics star on the world media stage. The World Economic Forum featured psychedelics for the first time ever in a program, “Medical Psychedelics House of Davos,” prompting coverage in mainstream publications such as Bloomberg. USA Today often features articles about psychedelics, such as the article on January 7 calling psychedelic therapy “the next big trend in mental health treatments.” The New York Times has also picked up its coverage of psychedelics since 2018—four features so far this year. 

In March, the 2022 SXSW show, which is focused on technology, entertainment and culture, and has presentations by world class celebrities and international thought leaders, featured ten sessions on psychedelics, and has added psychedelics as one of its main conference tracks for 2023. The psychedelics topic is also part of a growing group of discussions at TED talks. And the cannabis industry has begun adding psychedelics tracks to their workshops and seminars: both the annual Marijuana Business Conference and the Cannabis Science Conference feature multiple psychedelics sessions. 

 

  1. Clinical trials are growing and expanding exponentially. According to National Institutes of Health (NIH), there have been 25 MDMA studies started since 2020 in the U.S., including seven in 2022 alone so far, compared to just a handful since 2014. There were 30 psilocybin studies combined that were begun in 2021 and 2022, or almost as many studies as all of the other psilocybin studies combined in 16 years, from 2004-2020. There were 16 LSD clinical trials started between 2020 and 2022, with seven in 2021 alone—the most trials of any year since a single LSD trial in 2004. Ketamine has by far the most number of U.S. clinical trials (493) since 2002, with 34 so far in 2022, nearly matching the total of all ketamine clinical trials in 2021 (37). Elsewhere, there were nine psilocybin clinical trials begun in the United Kingdom between 2019 and 2022.

 

  1. Governments around the world signal they are OK with psychedelics. Government-funded psychedelics work in the U.S. made headlines late in 2021 when Johns Hopkins Medicine got the first federal grant for psychedelic treatment research in 50 years from the NIH. In May, the University of California/Davis (UC Davis) and the University of Colorado Anschutz Medical Campus got a $2.7 million grant from the National Institute on Drug Abuse, which is part of the NIH, to research psychedelics. The researchers will use the funding to screen hundreds of compounds to discover new, non-hallucinogenic treatments for substance use disorders. 

In Australia, there are seven clinical trials testing psychedelics that will receive a total of almost $15 million from the Australian Government’s Medical Research Future Fund (MRFF), according to an announcement in January. In Canada, the Canadian Institutes of Health Research (CIHR) launched a psilocybin-assisted psychotherapy $3 million funding opportunity in early 2022, led by CIHR’s Institute of Neurosciences, Mental Health and Addiction (INMHA) with funding provided by the Canadian Drugs and Substances Strategy (CDSS). And in Germany, the German Federal Ministry of Education and Research (BMBF) funded a psilocybin study done in 2021 at the Central Institute for Mental Health in Mannheim together with the Department of Psychiatry and Psychotherapy at Charité Campus Berlin Mitte and the MIND Foundation. It was reportedly a first for Germany and a large project at the highest scientific level.


Dave HodesJanuary 13, 2022
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10min170

On December 20, 2021, breakthrough research at the Usona Institute, a 501(c)(3) non-profit medical research organization based in Madison, Wisconsin, revealed the true crystal forms of pharmaceutical psilocybin. It’s a new discovery of characteristics of the polymorphs of the plant that have always existed but were not detected until now.

But that discovery has ignited controversy within the psychedelics industry about synthetic psilocybin patents being sought by Compass Pathways (NASDAQ: CMPS), one of the leading psychedelics product development companies, using what they said is their original discovery of essentially the same polymorph that the Usona research reported already existed.

The new Usona Institute study laid out the experimental challenges to solve the crystallographic puzzle of synthetic psilocybin, bringing clarity to the polymorphs (unique crystalline arrangements) that naturally occur from the production of synthetic psilocybin. 

Usona claims that the study conclusively shows that three psilocybin polymorphs repeatedly occur from the well-known crystallization process, and that they have appeared in numerous places throughout the history of synthesizing psilocybin since 1959. 

In short, the study finds that there is nothing new to see here.

But Compass Pathways sees it differently. The company said they invented the crystalline form of psilocybin used in their synthesized psilocybin formulations, polymorph A, and want to patent it. Not so fast, the experts says.

The rise of the patent conundrum

The team of Usona chemists and collaborating crystallographers say that they already solved key psilocybin crystal structures using powder X-ray diffraction (PXRD) data collected on psilocybin at the Advanced Photon Source synchrotron at Argonne National Laboratory. 

In the Usona process-scale crystallographic research investigation, three crystalline forms of psilocybin were repeatedly observed: hydrate A, polymorph A, and polymorph B. The crystal structure for hydrate A had already been solved using X-ray diffraction. 

Usona’s study presents key new crystal structure solutions for the two anhydrates, polymorphs A and B, previously unidentified but part of the crystal structure dating back to when the crystalline structure was first reported in the 1970’s. 

Dr. Alexander Sherwood, lead author of the study and medicinal chemist at Usona, said they were just following clues available to any researcher to put together a full, clear picture of the three psilocybin polymorphs. “The process for isolating and crystallizing pure psilocybin has been consistently reproduced since first reported in 1959, and many different clues throughout history pointed to three psilocybin polymorphs resulting from that process,” he said. “The crystal structure solutions unified all the old evidence and data with precision and elegance. Once we put it all into one place, the full picture came together to tell a complete and compelling story about psilocybin crystallization.”

Then.. the twist

That data, that new discovery information from a non-profit company just wanting to advance the science of psilocybin, is creating conflicts between purists who say psilocybin should not be subject to patents and companies looking to build capitalist enterprises based on patenting such new product discoveries.

That’s where Compass Pathways comes in. Compass Pathways has developed a synthesized formulation of psilocybin, COMP 360, which uses crystalline psilocybin, and, in November, 2021, was granted its fifth U.S. patent by the U.S. Patent and Trademark Office (USPTO)—U.S. Patent No. 11,180,517—which covers methods of treating treatment-resistant depression (TRD) with crystalline psilocybin. 

A petition filed December 15 will challenge the patent granted on March 16, 2021. Additional petitions challenging Compass’ patents from the Freedom to Operate (FTO), a non-profit seeking to advance science and education by fighting bad and mistakenly issued patents, are expected.

The December 15 FTO petition quoted expert declarations filed with it from Dr. Sven Lidin (dean at the Lund University in Sweden) and Dr. James Kaduk (professor of chemistry at Illinois Tech and contributor to the Usona study) who explained that “’Polymorph A’ is a mixture of known psilocybin polymorphs, not a new polymorph as claimed. Compass’s patent is therefore invalid as claiming a nonexistent polymorph..”

So can Compass still claim to have identified a new crystalline structure—a so-called novel variant as mentioned in their patent application—for their synthetic psilocybin? Or does this finding by Usona and statements in the filing challenging Compass now negate the Compass Pathway’s synthetic psilocybin patents?

 Usona reseachers also addressed this in their study: “Revision is recommended on characterizations in recently granted patents that include descriptions of crystalline psilocybin inappropriately reported as a single-phase ‘isostructural variant.’”

In other words, the Compass patents using crystalline psilocybin are at best controversial—and at worst, null and void. 

But the Usona Institute v. Compass Pathways disagreement serves to illustrate a deeper and growing issue between non-profit psychedelics companies like Usona who just want to create and advance better therapies to treat human conditions, and for-profit companies like Compass who want to build an enterprise trying to control access and use of a natural product. 

The questions for the psychedelics community are: Who can commercialize, and control, psilocybin? Or.. should that ever happen?

“No one objects to Compass manufacturing and distributing psilocybin for medical uses, and certainly not me,” Carey Turnbull, founder and director of FTO, in a letter from the founder. “On the other hand, Compass has used their resources to try to prevent anyone but themselves from manufacturing and distributing psilocybin. That’s the rub.”

He continues: “(Compass) is attempting to patent things they should know they did not invent. Patents are not a systemic fault of the system; bad patents that attempt to appropriate pre-existing knowledge from the public commons and then ransom it back to the human race are a misuse of that system.”


William SumnerMarch 20, 2018
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4min212

No one likes a fake, especially in the business world. Sometimes in order to drive sales or investor interest, companies will misrepresent who they are and what industry they’re in. A most recent example is when the company Long Island Iced Tea Corp. changed its name to “Long Blockchain Corp.” and saw its stock prices soar.

Closer to home there are countless companies hoping to capitalize on the crazy amount of buzz that the cannabis industry has generated; even if they’re not really in the cannabis industry. Today Green Market Report will separate fact from fiction and give you a look at some of the most notorious Cannabis Fakes.

Corbus Pharmaceuticals

Corbus Pharmaceuticals is (CRBP) late-stage stage clinical pharmaceutical company that specializes in the development and commercialization of novel therapeutics to treat rare, chronic, and serious inflammatory and fibrotic diseases. Lately, the company has enjoyed a bit of buzz as a “cannabis company” listed on the NASDAQ exchange, but the truth is less exciting. The drug that has led to this company being called a “cannabis company” is JBT-101, which is an oral endocannabinoid-mimetic drug. What that means is that JBT-101 interacts with endocannabinoid receptors by mimicking cannabinoids, no cannabis required. The company may enjoy a Outperform rating from Raymond James, but it is by no means a cannabis company.

Compass Diversified Holdings

Compass Diversified Holdings (CODI) is a company that acquires and manages mid-size businesses. Compass gets its cannabis credentials from its ownership of the hemp-based food company Manitoba Harvest as well as the appropriately named Hemp Oil Canada. Aside from the fact that these two companies are just a small piece of Compass’ greater portfolio, most hemp advocates would be keen to point out that hemp is not cannabis; despite the similarities that these two may share.

22nd Century Group

Perhaps the most egregious use of the term “cannabis company” has to come from 22nd Century Group (XXII). 22nd Century Group is first and foremost a tobacco company. They got the reputation as a cannabis company because of their work with the development of hemp-based cannabinoid related products and through its collaboration with the University of Virginia to cultivate industrial hemp. The company’s lead product, however, is a brand of “non-addictive” cigarettes that contact low doses of nicotine, which is in keeping with the US Food and Drug Administration’s overarching goal of reducing the amount of nicotine in cigarettes. An interesting business venture, perhaps, but 22nd Century Group is definitely not what you would consider a cannabis company.


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